The 45-year-old told the Old Bailey she only found out on July 4, 2011 that 13-year-old Milly's messages had been illegally accessed by the newspaper, and had known nothing about the role of phone hacker Glenn Mulcaire at the time.
As she returned to the witness box for a third day, the former News International chief executive was quizzed about the 2002 story of the missing Surrey schoolgirl, which brought about the tabloid's downfall.
Ms Brooks, who denies conspiring to hack phones, conspiring to commit misconduct in public office and conspiring to cover up evidence to pervert the course of justice, revealed that she did not know when she was editing the NotW that hacking was illegal.
She also told the court that hypothetically, if there was a strong enough public interest for a story, she might have authorised hacking while she was editor.
Asked about her reaction when she found out in 2011 that Milly's phone had been hacked by the NotW when she was at the helm, Ms Brooks, of Oxfordshire, said: "Shock, horror, everything.
"I was told that the NotW had asked someone to access Milly Dowler's phone while she was missing, that they had also deleted her voicemails and for a period of time because of that her parents had been given false hope and thought she was alive. I just think anyone would think that that was pretty abhorrent, so my reaction was that."
Ms Brooks said she did not know the practice was illegal, saying: "If you took my editorship of the News of the World at the time, I don't think anybody, me included, knew it was illegal."
The case continues.